The shearing process for the sheet metal is normally used in the precision elements such as a lead frame of IC chips. In these precision elements, the burr formation brings a bad effect on the system assembly and demands the additional deburring process. In this paper, we developed the small size precision punching system to investigate burr formation mechanism and to present kinematically punch-die aligning methodology between the rectangular shaped punch and die. The punch is driven by an air cylinder and the sheet metal is moving on the X-Y table system which is driven by two stepping motors. The whole system is controlled by microprocessor and is communicated with each other by RS232C serial communication protocol. Punching results are measured manually using the SEM photographs and are compared aligning result with miss aligning one.